Purje Residence

€200,000

Target fulfilled: 100%

Closed

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Purje
Residence investment opportunity overview

We
offer an opportunity to participate in financing of a residential real estate
development project in Pirita, Tallinn. The project consists of two
three-storey apartment buildings. The buildings are immediately next to former
Olympic sports center and Tallink Pirita Spa hotel. Project financing is fully
funded through bank loan and loan offered to Argeld investors.

Maximum
of 200 000 euros out of existing loan will be assigned through Argeld platform,
the remaining 650 000 euros will be retained by Novira Capital’s
subsidiary Novira Finance. Bank loan agreement for the project is concluded
with Luminor pank.

In
favour of the project:

Location in the prestigious Pirita district

Smaller sized buildings for apartments are highly valued

All financing and construction contracts have already
been concluded, construction is commencing

Offered
terms and conditions

Total
investment amount - 200 000 euros

Interest
rate - 10%

Interest
payments – at the end of Loan term

Minimum
investment amount - 100 euros

Loan
term – 01.11.2019

Loan
type – participation in second ranking development loan

Project
developer

Project
is developed by Brave Capital http://www.bravecapital.ee/en/, through wholly
owned subsidiary Growth Real Estate OÜ (register code 12673750). Brave Capital
team has a long term real estate development experience, starting from 1995,
having succesfully completed different living environments, offices, shopping
centers and apartement buildings.

The
best-known are residential developments in Veskimöldre and Merivälja2.
Recently, the same team is actively involved in the development of the
Veskimöldre 2 region, where construction is completed.

Buildings
and location

The Project
is located in Prita, between Regati, Masti and Purje street, immediately next
to Olympic center and spa-hotel. Before construction, area was used as a car
park. Good spacial overview and description of location is available on Project
web-sitehttps://www.purjeresidents.ee/#asukoht

The
development is on two properties – located at Regati pst 12, register number
2446150, and Purje tn 7, register number 2446050. Land plot area forms respectively
1885 m2 and 1875 m2.

Buildings
are planned energy-efficient and have carefully considered layouts. Parking will
be available in the underground and aboveground car parks; the buildings are
connected to public utilities networks and the surrounding area will be landscaped.

The
construction plans include only a few dwellings, as the city has decided to
reserve the seaside for public purposes and building projects. The main in
Tallinn, the Pirita Harbour, is 250 metres away. Pirita is among the favourite
places for residents of Tallinn to spend their free time. You can find many
things to do on the beach, in the Pirita river valley, or in the pine forests
nearby, which are known for being a quiet area with great running routes that
are well lit and used for cross-country skiing in the wintertime.

Business
plan

The
business plan includes construction of two three-floor apartement buildings in
highly valued living environment, with good access to beach and Pirita pine
forest. Very good and prestigous location justifies higher pricing for the
apartments. The buildings are planned smaller, with 3-floors and modern, nordic
architecture, which is preferred and appreciated by the buyers in this market
segment.

Total
building area is 2 836 m2, sellable area forms 1 860 m2, that
is divided into 27 apartments. Regati 12 building has two larger units with
146,7 and 171,4 m2 space. The average area of the remaining
apartments, excluding the two large ones, is 61,7 m2.

The
average sales price together with parking spaces and storage rooms is € 2 736
per square meter. There are 20 parking spaces available for sale, of which the
underground space price is 15 000 euros and the aboveground place price forms 9
900 euros. Storage room price per unit is 3 000 euros. At the moment, 8
apartments have already been reserved and two clients have signed agreement
according to the law of obligations with 20% prepayment.

The
expected sales period is 21 months, or one flat per month, including already reserved
apartments.

The
general construction contract was concluded with Nordlin Ehituse OÜ, who will
be acting as main contractor, contract price is fixed and delivery is date
certain. Estimated construction and entire arcitecture and design cost is 2,8
million euros. Contractor performance is secured by a customary 10% performance
guarantee. The construction was started in November 2017 and will last for 15
months, so apartments are ready to be handed over to buyers in early spring
2019.

Financing
plan

Land
acquisition was fully funded based on equity. Novira Finance agreed to finance
850 000 euros of construction costs, from which 200 000 euros is
planned to be assigned to Argeld investors and 650 000 euros will be
retained by Novira Finance. Last part of construction and finishing costs will
be financed by Luminor Pank in amount of 2,35 million euros.

Bank
loan collateral is first ranking mortgage in amount of € 3,055 million. Bank
and Novira Finance have signed subordination agreement, providing Novira
Finance right to acquire bank loan in case Project defaults.

Novira
Finance loan collateral is second rank mortgage, held by Luminor Pank on behalf
of Novira Finance and Argeld investors.

Sources
and Uses table below are calculated without land acquisition as from secured
creditors perspective it can be considered as sunk cost and it does not require further funding.

The
Borrower has a right to prepay part of entire loan, by notifying Lender in
advance 60 days.

Repayment
of the pledged loan

Loan
repayment will be made out of apartement realisation proceeds. Depending on
client interest level in the Project, refinancing of Argeld/Novira Finance is
also possible from bank at the end of construction process. Loan repayment date
is 01.11.2019 and borrower has a right to prepay by providing 60 days notice in
advance.

Collateral to the loan granted to Brave Capital OÜ

Loan is
secured with second rank mortgage on Regati pst 12 and Purje tn 7, Tallinn properties.
Mortgage amount is €1,3 million euros.

First
ranking mortgage is provided to Luminor Pank in amount of €3,055 million.

In addition
to mortgage, the Loan is secured with share pledge on Growth Real Estate OÜ shares
and with pledge on Brave Capital OÜ loan claim against Growth Real Estate OÜ.

Risk
overview

Bank loan

2 350 000 eur

Novira Finance/Argeld loan

850 000 eur

Total Loans

3 200 000 eur

Development land area

3 760 m2

Total sellable area

1860 m2

Total Loan Amount per land m2

851 eur/m2

Loan Amount per sellabel m2

1720 eur/m2

Average income from sales per m2

2736 eur/m2

LTV*

62,9%

*Value in
Loan to Value calculation is set to be equal to expected average sales income
per m2.

Risk
matrix

Completion

Market risk

Liquidity

Cost over-run

•

Completion delay

•

Access to infrastructure

•

Market volume

•

Price level

•

Realisation period

•

The most
important risk for the Project is market risk, that consists price and market
size related risks, together with realisation pace related risk. For this
particular Project, the completion related risks are relatively lower as
construction agreement has been signed with contractor, the Borrower and its
shareholders have provided undertaking to complete the construction within cost
and time budget and buildings are not very complicated.

Market Volume.Considering the
development value offer, it should be compared againsed othe Pirita, Kadriorg
and centrally located developments on sale. During the first half of 2017,
based on adaur.ee in central Tallinn 329 new apartments were sold, in Kadriorg
48 and in Pirita 25 apartments. It is safe to assume that in terms of
price-segment, Purje residence belongs to upper market quarter, sizing the relevant
premium segment roughly at 100 apartments and its expected share about 10-15%
from segment number of units.

In 2017
September 728 apartments for were for sale in Tallinn with prices exceeding 2700
euros or higher.

As a summary
market for higher priced apartments exists, but the sales period after
construction completion must be assumed at least 12-months, forming with
off-plan pre-sales during the construction period 2-years.

Price level. Price level
related risks are average, the assumed sales price of 2736 euros per m2
corresponds in general to the prices in the neighbourhood. Development in near-by Masti 1a is selling at
2850 – 3000 euros per m2.

Considering
general construction cost increase and economical environment, the price
decrease is not very likely in coming year. Following periods are complicated
to predict, but main risks are mostly related to change in broader economical
environment.

Liquidity
risk and realisation pace. The developer is expecting 12 month sales period
after construction completion and entire realisation takes in total 24 months.
This assumes on average sales of two Apartments in month, first based on law of
obligations and subsequently signing of notarised property agreement.

Cost over-run. The Loan Agreement obligates the developer to sign construction
contract with performance guarantee for at least 10% of contract amount.
Additionally, the developer committed to complete the project according to the
budget, budget over-run gives the lender a right to demand early repayment of
the loan. Contractor has also obligation to insure construction process with
Contractor All Risk insurance policy. Additionally, Brave Capital
undertook to provide cost over-run financing in case of a need.

Completion
delay.the developer has a legal obligation to complete the
project according to the Schedule, any delay provides to the
lender right to declare default and accelerate all payments immediately.
Construction process started in November 2017 and completion will be achieved
in November 2018.

Access to the infrastructure.Access
to utilities networks is existing.

Investment object

Project developer

Brave Capital OÜ

Company code

11903432

Address

Harju maakond, Tallinn, Kesklinna linnaosa, Liivalaia tn 33,
10118

Developer's background

Borrower's main beneficiaries are Veljo Kuusk and Arto Autio.
Brave Capital team has long-term real estate development experience, one of
the recent developments is Veskimöldre2 development

Capital raise

Amount to be raised

€ 200 000

Instrument

a share of claim against the Project Developer

Minimal investment

€ 100

Paybacks to Investor

Funds received from the Project Developer will be allocated to investors
proportionally according to investment amount

Yield

10,0%

Terms and conditions

see Loan conditions

Pledged loan claim conditions

Total loan amount

Total loan € 850 000, investors share €200 000

Loan purpose

Development of two apartment buildings at Regati pst 12 and
Purje 7

loan term

1.11.2019

Loan repayment

Loan repayment will be made from apartment sales proceeds

Interest payment

one payment at the end of the loan term

Interest payment frequency

one payment at the end of the loan term

Collateral

second rank mortgage, share pledge and claim pledge

Collateral ranking

second

Collateral object

two properties located at Regati pst 12 and Purje tn 7

Mortgage amount

€ 1 300 000

Mortgagor

Growth Real Estate OÜ

Terms and conditions

prepayment of loan partly or fully allowed with 60 days notice
in advance